I lived and worked in Shanghai and Hong Kong for almost two decades and now write primarily on China, Asia, and nuclear proliferation. I am the author of two Random House books, The Coming Collapse of China and Nuclear Showdown: North Korea Takes On the World. My writings have appeared in The New York Times, The Wall Street Journal, Barron’s, Commentary, and The Weekly Standard, among other publications. I blog at World Affairs Journal. I have given briefings in Washington and other capitals and have appeared on CNN, Fox News, MSNBC, Fox Business, Bloomberg, CNBC, and PBS. I served two terms as a trustee of Cornell University.

China Purge Fears Paralyzing Government And Undercutting The Economy

In China, local bureaucracies are “effectively on strike,” notes John Fitzgerald, director of the Asia-Pacific Center of Swinburne Business School in Australia. Decision makers are not making decisions, he tells me, and business deals are being held up because officials are refusing to approve or disapprove them. A foreign professor I know reports that two well-placed academics in Beijing and Shanghai told him this month that those in charge, in their universities and elsewhere, are now so scared that “nobody dares to make decisions or do anything.”

From one side of China to another, officeholders are working as little as they can. Premier Li Keqiang, according to state media, thumped a table with his fist in May, slamming cadres for not “doing a stroke of work.” Last month, People’s Daily, the Communist Party’s flagship publication, issued three page-one commentaries criticizing officials for their dereliction, “avoiding the limelight” as the paper put it.

Government workers are going to extremes. Some of them are opting for early retirement. Others have gone further, jumping from buildings and taking their lives in less dramatic fashion.

What’s wrong in China? Xi Jinping, Communist Party general secretary since November 2012, has launched a nationwide anti-corruption campaign that has terrorized most everyone holding a position of responsibility in government. The newish leader famously promised to take down both “tigers”—those of high rank—and “flies,” and he has made a bold start.

So far, he has stripped Bo Xilai, once China’s most charismatic politician, of all assets and sent him to prison for life for corruption and abuse of power. Bo’s mentor, Zhou Yongkang, the country’s former internal security czar, is believed to be under “virtual house arrest” in Beijing while authorities investigate allegations. Many of Zhou’s family members and associates, once forming the powerful Petroleum faction in the Party, are in detention.

Xi is now going after the underlings in the patronage network of his predecessor, Hu Jintao, and there is evidence to suggest he is also gunning for Hu’s predecessor, Jiang Zemin. The moves, therefore, look like attempts to bring down both Jiang, the leader of the Shanghai Gang faction, and Hu, head of the Communist Youth League faction. Xi, it seems, is in the midst of destroying all other power centers in the country’s ruling organization, firmly rejecting the live-and-let-live mentality that has kept peace in Beijing since the sentencing of the Gang of Four in early 1981.

As a part of this ambitious effort, Xi is also targeting senior military officers, most notably Xu Caihou, a Jiang ally. The gravely ill Xu—stricken by cancer—was stripped of Party membership at the end of last month and, despite his retirement, will be court martialed for taking bribes and selling promotions to junior officers. The former general is the most senior officer ensnared in an investigation of this sort since the founding of the People’s Republic in 1949. The PLA Daily, the military’s most authoritative publication, has carried numerous reports this year of generals and admirals condemning Xu and taking what are tantamount to public loyalty oaths to Xi.

In the past, Jiang and Hu, the former leaders, made examples of one or two tiger-like figures in “corruption” probes. Xi’s campaign, however, has been far more determined. In less than two years, the current supremo has felled more big game than Hu Jintao, his immediate predecessor, bagged in ten.

Xi’s investigations are not about official venality. Xi, to be sure, is incarcerating corrupt figures, but he is not doing so for their corruption. He is purging political opponents using corruption as an excuse. Tellingly, none of the individuals Xi has put away is either one of his family members or a supporter. And if China’s leader was really determined to rid his country of corruption, he would not be relentlessly jailing anti-corruption activists.

Nonetheless, Xi’s ongoing campaign, according to Australian National University’s Richard Rigby, is popular with the laobaixing, the common folk. One of Rigby’s interlocutors in China told him the Chinese people “don’t give a damn whether people are going down as part of factional or power struggles, or for whatever reason, it’s just good to see them going down.” Emboldened, citizens are hounding greedy officials, publicizing their misdeeds and driving them from office.

In this environment, those in government feel endangered. They are being hunted from both above—a ruthless Xi Jinping—and below—an understandably vengeful populace. So bureaucrats and bosses are laying low, hoping for the situation to blow over.

In the meantime, they must spend time filling out forms listing their assets. These days, they must also disclose where family members and relatives live. The Chinese people have become enraged by “naked officials,” those with spouses and children living abroad, and Xi is determined to end the phenomena.

While all this happens, economic activity is beginning to suffer. Nie Wen, an economist with Shanghai’s Hwabao Trust, tells Reuters that official inaction, caused by the anti-corruption campaign, is “having a big impact on the economy.”

And the situation will surely get worse. Xi’s campaign is now so ferocious that some Chinese think they could be on the eve of another Cultural Revolution. Eric Kalkhurst, a China trade consultant, wrote to friends this month that a “Shanghai businessman with interests in Hong Kong,” who last year was “super gung-ho on China and its rise in the world,” is now worried that his country is going to relive Mao Zedong’s decade-long campaign that destroyed China’s economy and social fabric.

Xi, who often invokes Mao and adopts Maoist tactics like “mass line” campaigns, probably will not launch another ten years of Cultural Revolution-like lunacy, but he is pushing his country in wrong directions. “I believe that China business will slow down because of all the controls that will be enforced on government officials and businessmen,” Kalkhurst notes. “Forecasts will continue to be rosy but the real economy will not be as good.”

“How many times have you heard the Chinese described as pragmatists?” Arthur Waldron, the University of Pennsylvania’s famed historian, asked me the beginning of this month. “They’re not.” And Waldron appears right because many of China’s problems are now self-inflicted, or at least inflicted on the country by Xi. As Kalkhurst notes, referring to the stumbling economy, “I believe that Xi is most willing to accept this in order to have the control he desires.”

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